Summary of Cobalt Market Outlook and Key Insights Industry Overview - The cobalt market is experiencing significant changes due to supply constraints and increasing demand driven by technology sectors such as 3C products and AR glasses. [1][3] Supply and Demand Projections - **Global Supply**: In 2025, global refined cobalt supply is expected to decrease by 11% to 228,000 tons, but is projected to recover to 239,000 tons in 2026. [1][2] - **Global Demand**: Demand for cobalt is anticipated to grow by 9.4% in 2025 to 242,000 tons, reaching 251,000 tons in 2026, although the growth rate is expected to slow. [1][3] - **China's Supply**: China's refined cobalt supply is expected to decrease by 8.6% to 151,800 tons in 2025, with a recovery to 193,500 tons in 2026. [1][4] - **China's Demand**: China's demand for refined cobalt is projected to grow by 20% in 2025 to 193,000 tons, reaching 202,600 tons in 2026, driven by the aging population and health economy. [1][4] Impact of Congo's Export Policies - The Democratic Republic of Congo (DRC) has implemented strict export controls, leading to a 31% decline in global raw material supply in 2025. [5][11] - The DRC's policies have resulted in a significant reduction in imports of wet intermediate products and a notable increase in MHP imports, while imports of products like cobalt tetroxide have decreased. [6][11] - The DRC's export quota for 2026-2027 is limited to 96,600 tons, exacerbating supply constraints. [5][11] Price Trends - Prices for cobalt salts have seen significant increases, with intermediate prices rising by 112% from 2024 to 2025. [9] - Cobalt sulfate prices increased from 29,900 CNY/ton to 55,900 CNY/ton, while cobalt chloride rose from 36,800 CNY/ton to 67,800 CNY/ton. [9] - The price of refined cobalt is expected to reach new highs, with projections of 350,000 to 600,000 CNY/ton. [8] Market Dynamics - The cobalt market is expected to face a supply shortage of approximately 12,000 tons in 2026, with global refined cobalt supply at 249,000 tons and demand at 251,000 tons. [2][12] - MHP projects and recycling materials are anticipated to be the main sources of supply growth, contributing over 20% to the market. [13] Regional Insights - Indonesia's share in raw material supply is expected to increase to around 27% in 2026, with new projects expected to come online. [2][14] - The Chinese market is projected to maintain strong demand, particularly in the battery sector, driven by the growth of 3C products. [4][32] Challenges and Opportunities - The cobalt industry faces challenges from geopolitical risks and policy changes, which may lead to price volatility. [8][11] - Despite the challenges, the demand for cobalt in aerospace and military applications remains stable, providing a buffer against market fluctuations. [8] Conclusion - The cobalt market is navigating a complex landscape of supply constraints, rising demand, and significant price fluctuations, with the DRC's export policies playing a crucial role in shaping future dynamics. [1][5][11]

Group 1 - The total output value of the non-ferrous metal new materials industry cluster in Jinchang has reached 119.75 billion yuan from January to November, showing a year-on-year growth of 21.5% [14] - Since the "14th Five-Year Plan," Jinchang has restructured its industrial layout with a full industry chain approach, achieving a breakthrough in the industry chain and releasing cluster effects [14] - The output value of this industry cluster exceeded 105 billion yuan last year, with a year-on-year increase of 155.7% compared to 2021, and an average annual growth rate of 36.7% [14] Group 2 - The industry has established a complete industrial system covering nickel, copper, cobalt, precious metals, and titanium, focusing on core strategies of "optimizing nickel, strengthening copper, increasing cobalt, expanding precious metals, and promoting titanium" [14] - In the nickel industry chain, Jinchuan Group has formed a matrix of four major categories with over 20 enterprises, aiming for an electrolytic nickel output of 200,000 tons in 2024, accounting for 35% of the national total [14] - The copper industry chain is expected to produce 1 million tons of cathode copper annually, with 6-micron ultra-thin copper foil filling domestic gaps, significantly supporting the development of the new energy and chip industries [14] Group 3 - The cobalt industry chain focuses on the new energy track, achieving an output of 7,000 tons of electric cobalt and 100,000 tons of ternary precursors last year, with a local supply rate of over 80% for battery materials [15] - The precious metals industry chain, leveraging resource advantages, produces 10 tons of platinum group metals and 100 tons of gold annually, with rare metal production capacity ranking among the top in the country [15] - The titanium industry chain has formed a closed loop of "titanium metallurgy + titanium processing + titanium chemical," with products directly supplied to the aerospace sector [15] Group 4 - Technological innovation has injected strong momentum into industrial upgrades, with 36 new products achieving mass production and the Jinchuan Group's carbonyl metallurgy pilot platform being selected as one of the first key cultivation platforms by the Ministry of Industry and Information Technology [15] - Smart manufacturing has made new breakthroughs, with the 5G smart mining project being recognized as a national typical case, improving human-machine collaboration efficiency by 30% [15] - The Jinchang nickel-cobalt-copper new materials and application cluster has been upgraded to a national advanced manufacturing cluster [15]

Group 1 - The core viewpoint of the report indicates that the new quota management system in the Democratic Republic of Congo (DRC) will significantly restrict global cobalt supply, leading to a projected supply decrease to 200,000 tons by 2025, with further increases to 214,000 tons in 2026 and 216,000 tons in 2027 [1][2] - Global cobalt consumption is expected to maintain a steady growth rate, with projections of 221,000 tons in 2026 and 231,000 tons in 2027, indicating a rigid supply shortage for cobalt [1][2] - The DRC's new quota system has replaced the previous export ban, with annual export volumes expected to be less than 100,000 tons, including a base quota of 87,000 tons and a strategic quota of 9,600 tons [2] Group 2 - The inventory of cobalt products is continuously being consumed across the entire supply chain, with significant reductions in cobalt intermediate stocks in China, dropping from 45,000 tons in May to 17,000 tons currently, resulting in a total reduction of 32,000 tons over five months [2] - Cobalt product prices have experienced a significant increase, with the average CIF price for cobalt intermediates in China rising from $5.95 per pound to $24.15 per pound, marking a 306% increase [3] - The U.S. Department of Defense is set to restart a $500 million cobalt procurement tender, marking the first large-scale cobalt purchase by the U.S. since the end of the Cold War, with the announcement expected in early February 2026 [3]

Industry Developments - DeepSeek has released the V3.2 series models, enhancing agent capabilities with reasoning abilities on par with GPT-5, integrating thinking modes with tool invocation for everyday applications [1] - In the electric vehicle sector, Leap Motor achieved a delivery volume of 70,327 units in November, marking a year-on-year increase of over 75%, while NIO saw a 76.3% increase in deliveries [3] Market Trends - Silver prices have reached a new high of $58.8 per ounce, with a year-to-date increase exceeding 100%, driven by supply tightness and speculative pressures [2] - Gold prices have also risen, reaching a six-week high of $4,264 per ounce [2] Macroeconomic Insights - The Minister of Finance, Liu Fuan, emphasized the need to increase residents' income through various channels and to boost consumption as part of a proactive fiscal policy [4] Investment Insights - Analysts suggest that the market is currently experiencing frequent style shifts, with a focus on sectors like artificial intelligence and new energy for potential growth in the coming year [7][8] - Morgan Stanley predicts that Google's large-scale sales of TPU chips will significantly increase production forecasts, benefiting related hardware suppliers [9]

Core Viewpoint - The Democratic Republic of Congo (DRC) has implemented a new quota management system for cobalt exports, setting annual export limits for 2026 and 2027 at 96,600 tons each, primarily allocated to companies like Luoyang Molybdenum and Glencore, while local smelters receive no direct quotas [1][2]. Group 1: Cobalt Quota and Supply - The new quota system replaces the previous cobalt export ban, with 87,000 tons designated as basic quotas and 9,600 tons as ARECOMS strategic quotas [2]. - The global cobalt raw material supply is expected to decrease significantly, with projections indicating a supply of only 200,000 tons by 2025, while global cobalt consumption is anticipated to reach 221,000 tons and 231,000 tons in 2026 and 2027, respectively, indicating a rigid shortage [3]. Group 2: Inventory and Price Dynamics - The inventory of cobalt products is continuously depleting, with China's cobalt chloride inventory days dropping from 46 days in April to 39 days currently, and the inventory of intermediate products at downstream smelters decreasing from 45,000 tons to 17,000 tons over five months [4]. - Cobalt product prices are currently inverted, with the average CIF price for cobalt intermediates in China rising from $5.95 per pound to $24.15 per pound, a 306% increase, indicating potential for further price adjustments as raw material inventories are consumed [5]. Group 3: Strategic Developments - The U.S. Department of Defense plans to restart a $500 million cobalt procurement tender, marking the first large-scale cobalt purchase by the U.S. since the Cold War, with awards expected in early February 2026 [6].

Macro Research - The core inflation and overall CPI have been diverging since the beginning of the year, driven by anti-involution governance, fiscal support, and rising gold prices, which are beneficial for the long-term recovery of core inflation [2][5] - In October, the CPI increased by 0.2% year-on-year and month-on-month, while the PPI decreased by 2.1% year-on-year but rebounded to 0.1% month-on-month, indicating a steady recovery in inflation [3][16] Overseas Strategy Research - The recent strengthening of the US dollar is primarily due to the US government shutdown causing liquidity issues, hawkish statements from the Federal Reserve, and weakness in non-US currencies [6][25] - Historically, a strong dollar has led to capital outflows from Hong Kong stocks, and under the currency peg system, it may temporarily affect local liquidity and sectors in Hong Kong [7][26] - Short-term focus should be on the reopening of the US government and economic data, while mid-term prospects for Hong Kong stocks are optimistic, particularly in the technology sector [8][27] Transportation Industry Research - The Chinese aviation sector is expected to enter a "super cycle" as supply and demand gradually recover, with a significant increase in profitability anticipated [9][10] - The supply side is constrained by airspace bottlenecks, leading to a low growth environment, while demand is expected to remain robust due to the ongoing aviation population dividend [11][10] - The recovery in demand will drive ticket prices higher, contributing to a sustainable increase in profitability for airlines [10][11]

Summary of Tengyuan Cobalt Industry Conference Call Company Overview - **Company**: Tengyuan Cobalt Industry - **Industry**: New Energy Battery Materials - **Main Products**: Cobalt and Copper - **Current Capacity**: 60,000 tons of copper in the Democratic Republic of Congo (DRC), with plans to expand to 90,000 tons. Cobalt production currently at 31,500 tons, with a target of 22,000 to 24,000 tons for the year 2025 [2][3][4]. Key Financial Performance - **Q3 2025 Revenue**: 2.22 billion yuan, a 32% year-over-year increase - **Net Profit**: 280 million yuan, a 48% year-over-year increase - **Total Revenue for First Three Quarters**: 5.75 billion yuan, an 18% increase year-over-year [3]. Production and Sales Insights - **Cobalt Products**: Cobalt chloride and cobalt tetraoxide account for over 60% of sales, driven by demand for lithium-ion batteries [2][10]. - **Copper Production**: Annual target set conservatively at 50,000 to 55,000 tons due to earlier disruptions from power shortages [4][12]. - **Inventory**: Approximately 3.4 billion yuan in inventory, with cobalt raw material stock among the top tier in the industry [4]. Profitability and Margins - **Cobalt Gross Margin**: Slight increase in Q3, while copper gross margin saw a slight decline due to rising raw material prices and transportation costs [9]. - **Expected Gross Margin**: Anticipated to be between 20% to 30%, potentially reaching 30% to 40% with inventory gains [4][12]. Supply Chain and Resource Management - **Raw Material Supply**: Actively negotiating with DRC government for cobalt quotas and ensuring stable raw material supply through multiple channels [4][14]. - **Recycling Initiatives**: Dominating the market with over 70% of high-cobalt scrap procurement, expected to account for 30% to 50% of total raw material needs by 2026 [4][14]. Future Growth and Expansion Plans - **Copper Capacity Expansion**: Plans to add 20,000 tons of copper capacity by the end of 2026, with an additional 10,000 tons in the first half of 2025 [18][16]. - **Market Outlook**: Anticipated copper prices may reach $10,000 per ton, boosting profit contributions significantly [4][16]. Strategic Insights - **Technological Edge**: All production processes are self-developed, with a fixed asset return rate of 23.27%, significantly above the industry average [6]. - **Supply Chain Advantages**: Strong relationships with downstream clients in various sectors, including new technologies like AI and drones [7][15]. Market and Pricing Outlook - **Price Predictions**: Short-term price expectations range from 28,000 to 35,000 yuan, with potential extreme fluctuations by the end of Q4 [24][27]. - **Industry Trends**: General consensus in the industry suggests a price peak around year-end, with companies likely to release inventory [23]. Conclusion Tengyuan Cobalt Industry is positioned strongly within the new energy battery materials sector, with robust financial performance, strategic growth plans, and a focus on sustainable resource management. The company is well-prepared to navigate market fluctuations and capitalize on emerging opportunities in the cobalt and copper markets.

Core Viewpoint - The lithium battery downstream demand remains strong, driving prices higher due to inventory depletion, while cobalt products continue to rise but with slower downstream follow-up, indicating a potential slowdown in price increases [1][2]. Lithium Sector - The lithium sector is experiencing a peak demand season, with inventory depletion pushing prices up. The weekly price of lithium carbonate in Wuxi rose by 1.32% to 76,500 CNY/ton, while the price in the Shanghai Futures Exchange increased by 4.25% to 78,900 CNY/ton [1]. - Lithium concentrate prices reached 881 USD/ton, an increase of 35 USD/ton compared to the previous period, reflecting strong demand from downstream buyers [1][2]. - The production of battery-grade lithium carbonate averaged between 74,500 and 76,330 CNY/ton, with a weekly increase of 2.79% [2]. Cobalt Sector - Cobalt prices are experiencing upward pressure, but the actual demand from the downstream is limited, leading to a slower price increase. The average price of electrolytic cobalt rose by 6.96% to between 400,000 and 415,000 CNY/ton [3]. - Cobalt salt prices are stabilizing as downstream acceptance of current prices is low, focusing mainly on inventory digestion and essential replenishment [3]. - The integration of cobalt-nickel precursor production enhances competitive barriers for cobalt companies, as they extend their reach into the new energy sector [1][3]. Market Dynamics - The overall market is witnessing a strong demand for lithium, supported by the rapid growth of power batteries and a thriving energy storage market, with the operating rate of downstream manufacturers continuously increasing [2]. - Despite the strong demand, the supply side is also seeing new production lines coming online, which may exert pressure on prices in the latter part of November [2].

Core Viewpoint - The recent quota policy from the Democratic Republic of Congo (DRC) has established a total quota of 96,600 tons for cobalt exports, with a base quota remaining unchanged at 87,000 tons, impacting major companies in the industry [1][2]. Quota Distribution - The quota distribution is as follows: - Luoyang Molybdenum Company (Luoyang Moly) received 36% of the quota, equating to an annualized 31,200 tons - Glencore received 22%, or 18,800 tons - Eurasian Resources received 12%, or 10,000 tons - The local company EGC received 6.5%, or 5,640 tons - Other Chinese companies such as Northern Mining received 5.5% (4,800 tons), Shengton Mining 2% (1,680 tons), and Huayou Cobalt 1.24% (1,080 tons) [2][3]. Policy Implications - The quota allocation aligns with expectations based on historical export volumes from January 1, 2022, to December 31, 2024, although the allocation for EGC is notable given its lack of past exports [3]. - The introduction of a 10% royalty fee on sales value for companies receiving cobalt export quotas is expected to significantly increase local revenue [3]. Market Outlook - The total quota of 96,600 tons represents a 56% decrease compared to last year's exports of nearly 220,000 tons, indicating a tighter supply-demand balance for cobalt [4]. - Current inventory levels are critical, with an estimated four months of supply across the industry chain, which could lead to increased price pressures as inventory is consumed [5]. Price Trends - As of October 13, cobalt prices have seen significant increases, with prices for cobalt sulfate, lithium cobalt oxide, and battery-grade cobalt rising by 40%, 38%, and 29% respectively from September 22 to October 13 [5]. Investment Recommendations - The industry is expected to experience upward price movement due to ongoing inventory depletion and low stock levels, with a long-term view suggesting a potential increase in cobalt price stability [5]. - Companies less affected by DRC policies, such as Huayou Cobalt and Likin Resources, as well as low-cost producers like Luoyang Moly, are recommended for investment [5].

Summary of Key Points from the Conference Call on Cobalt Industry Industry Overview - The conference call discusses the impact of new cobalt export policies in the Democratic Republic of the Congo (DRC) on the cobalt supply chain and market dynamics [1][2][9]. Core Insights and Arguments - **Logistics and Supply Chain Impact**: The new export policy has significantly extended the logistics cycle to approximately four months due to prepayment fees, customs documentation, and sample inspections, leading to a sharp decline in cobalt imports to China by May 2025 [1][2][3]. - **Cobalt Export Quota**: The DRC's strategic cobalt export quota is set at 9,600 tons, accounting for nearly 10% of total exports. The distribution of this quota remains uncertain, with expectations that it will not be directly allocated to the U.S. due to the DRC's need to maintain fiscal revenue [1][6]. - **Supply Increase from New Smelter**: The new smelter by Huayou Cobalt in the DRC is expected to add 5,000 tons of electrolytic cobalt annually, but stricter controls on semi-finished product exports may hinder global cobalt circulation [1][7]. - **U.S. Strategic Reserves**: The U.S. plans to stockpile 1,500 tons of cobalt annually starting in 2026, with approximately 77,000 tons of nickel-cobalt materials imported in the first half of the year, indicating a strategic reserve intention [1][7][10]. - **Chinese Market Dynamics**: China's cobalt inventory is being consumed, with expectations of reduced consumption due to import disruptions starting in September, potentially lasting until the end of Q1 2026 [1][7][12]. - **Indonesian Supply Limitations**: While the MHP project in Indonesia will increase supply, it is expected to only contribute about 90,000 tons by 2028, leaving a monthly shortfall of 1,000 to 2,000 tons, exacerbating inventory reduction pressures in China [1][12]. - **Price Projections**: Short-term cobalt prices may reach peak levels seen in 2022, with conservative estimates around 400,000 CNY/ton and aggressive predictions up to 500,000 CNY/ton, although excessively high prices could lead to material substitution [2][14][22][23]. Additional Important Insights - **Regulatory Compliance Challenges**: New regulations require companies to prepay fees and submit extensive documentation, increasing operational difficulties for Chinese enterprises [3][4][5]. - **Market Sentiment and Risks**: The current market is characterized by tight supply and strong demand, with potential price volatility due to speculative trading and profit-taking behaviors [25]. - **Long-term Supply Outlook**: The global cobalt market is expected to remain in a state of tight balance or shortage over the next few years, with an estimated annual shortfall of at least 20,000 tons [24]. This summary encapsulates the critical aspects of the cobalt industry as discussed in the conference call, highlighting the implications of regulatory changes, market dynamics, and future projections.